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2014 (3) TMI 666 - AT - Central ExciseValuation of goods - Revenue contends that appellant should have gone by the residual rule in the said Rules and adopted the valuation principle under Rule 8 of the Central Excise Valuation Rules prevailing prior to 2007 and after 2007 - Held that - consumption is by any other person other than the main supplier of material, it cannot be considered as a case of captive consumption. The job worker has no means of realizing the profit, if any, in the further use of the manufactured product in manufacturing other products. Therefore, the entire argument that Rule 8 is applicable to the situation has no prima facie basis except that the person supplying raw material is using the finished goods in his factory for further manufacture. Since the matter is already considered by the Tribunal in the decisions CCE, Ahmedabad v. Palco Metals Ltd. 2011 (4) TMI 460 - CESTAT, AHMEDABAD and Indian Extrusions v. CCE, Mumbai 2012 (5) TMI 271 - CESTAT, MUMBAI , we adopt the principle laid down in those decisions. Consequently, we consider the offer made by the counsel is reasonable for admission of appeal - Conditional stay granted.
Issues:
Dispute over valuation for duty liability on job work of iron and steel products for motor vehicle parts during 4/2005 to 3/2009 under Central Excise Valuation Rules. Comprehensive Analysis: Issue 1: Valuation Dispute The appellant, engaged in job work on iron and steel products for motor vehicle parts, faced a dispute regarding the valuation for discharging duty liability on such products from 4/2005 to 3/2009. The Revenue contended that the appellant should have adopted the valuation principle under Rule 8 of the Central Excise Valuation Rules, both before and after 2007. A show cause notice was issued, leading to a demand for excise duty, interest, and penalty. The appellant challenged this in an appeal, arguing against the Revenue's interpretation of the valuation rules. Issue 2: Interpretation of Central Excise Valuation Rules The appellant's counsel argued that under the Central Excise Valuation Rules of 2007, Rule 10A (i) and (ii) should not be applied as per a plain reading of the sub-clauses. The Revenue sought to apply sub-rule (iii) of Rule 10A, stating that when (i) and (ii) are not applicable, preceding rules should apply for determining the value of excisable goods. The appellant contested this interpretation, emphasizing that Rule 8 should only apply when the manufacturer consumes the goods captively, not in cases where a job worker manufactures goods for the principal manufacturer. Issue 3: Application of Rule 8 and Precedents The Revenue argued that Rule 8, read with Rule 11, should apply, suggesting a case of captive consumption and proposing the addition of a notional profit of 10%. In response, the appellant relied on Tribunal decisions such as CCE v. Palco Metals Ltd. and Indian Extrusions v. CCE, contending that the profit of the job worker was already included in the conversion charges to the principal manufacturer, leaving no scope for further profit margin under Rule 8. This argument aimed to invalidate the demands for the post-1-4-2007 period, significantly reducing the payable amount. Judgment and Conclusion After considering arguments from both sides, the Tribunal found that the job worker's consumption of the goods did not constitute captive consumption, as the worker had no means of realizing any profit from the further use of the manufactured product. Relying on previous Tribunal decisions, the Tribunal rejected the Revenue's interpretation and adopted the principles laid down in those precedents. The Tribunal deemed the offer made by the appellant's counsel for a pre-deposit reasonable for admission of the appeal. Consequently, the Tribunal directed the appellant to make a pre-deposit within a specified period, with the balance of adjudged dues waived subject to compliance, and recovery stayed during the appeal's pendency.
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